At my recent seminar, one of the questions was: Why are Living Trusts called “Living Trusts”? The person who asked is very intelligent and it is a really good question, especially since Living Trusts focus on planning for what happens to your estate when you die, avoiding probate and taxes. The term Living Trust has been used to refer to a Trust which could be revoked for years. It is called a “Living Trust” because it is created during your lifetime and controls your property both when you are alive and when you are dead. It avoids probate, because the Trustee (the manager of the property) can be changed when one Trustee becomes incapacitated or dies.
- Avoid Probate
Probate is the process of handling an estate when someone dies. If you die with a significant Estate and have only a Will, you will go through Probate. A LivingTrust that is properly funded will not go to court. Funding a Trust is making sure that all your assets are properly titled in your Trust.
- Avoid Taxes
A Living Trust can be designed to avoid Estate Taxes (not much of a worry today as the Estate Tax exemption is well over 11 Million Dollars), but there are other taxes to avoid, Capital gains taxes, and the increase in property taxes that can occur when a property transfers. A Living Trust prepared by an Attorney who knows how to avoid all the taxes can make sure that your family saves on every possible tax.
- Take Care of You and Your Family
A Living Trust can make sure you or your loved ones are cared for even if you become sick or incapacitated, but you have to make sure to plan for what happens if you don’t die. Unfortunately, most people forget about this and only worry about what happens when you die, and their Trust reflects that. If you have an Elder Law Attorney like Martha Patterson prepare your living Trust, she will make sure that your Living Trust is truly living and not a death plan.